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Objective:

The purpose of this document is to explain rationale of Co-product planning and to understand SAP basic configurations required for same.

Definition:

There is thin line between co-product and by-product in manufacturing space.

A co-product is a product that is produced in conjunction with other products. Technically the system creates a separate order item in
the production order for each co-product. As a result, it is possible to display actual costs at co-product level.

A by-product is a product that is produced in conjunction with other products. The system does not create a separate order item for each
by-product. The material valuation of a by-product is always based on the price specified by price control in the material master.

Co-product scenarios are often seeing in Chemicals, Food, Consumer Goods industries. In this article I provided example of Palm Oil
industry.

Typical finished products of a Palm oil industry are: Cooking Oil, Margarine and specialty fats. 

 

Crude Palm oil is basic raw material for these Products.

Manufacturing Process:

CO Process.png

Master Data for scenario script:

Finished Product –COFG01

Raw Material – OLRM01

Co product – STRM01

Locations –

DC-1012

 

Plant – 1010

Supply Network –

1010 –> 1012

   

Material Master Settings in ECC:

Activate co product indicator in material master of Stearin.

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BOM settings in ECC:

Enter quantity of co product – Stearin as ‘–ve’.

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Production Data Structure (PDS) in APO:

This BOM will be moved as PDS in APO and the Co-product (Stearin) is tag as Output material in PDS.

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Supply Planning Process:

In APO:

To keep scenario simple, APO SNP Heuristic used for Supply Planning calculations.

 

Forecast exists at DC Location 1012 for COFG01.

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For FG, based on distribution demand propagated from 1012 location, system suggests Planned Order at 1010 to build stock of 10 Qty.

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For Co-product, based on the qty maintained in BOM and demand for FG, system suggests a receipt element for co product:

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For Raw material, based on Dependent Demand system suggests Distribution receipts.

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In ECC:

(T code – MD04)

For FG Planned order transferred

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For Co-product, the receipt element transferred as Dependent Requirement but in positive quantity:

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For Raw Material Dependent Requirement transferred in negative quantity:

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